Roundtable: Gulf based managers set up dozens of new funds, attract foreign capitalSign up here for our free Roundtable Scripts - get this unique intelligence by email as Opalesque publishes them: While in the past Middle Eastern investors tended to outsource asset management to Western managers, today we can see that a lot of assets are staying there, and funding local projects; infrastructure, healthcare, education, and real estate. Dozens of new funds are set up — while about 50% of them will be real estate focused, the other 50% represent a mixture of private equity, venture capital, mezzanine, credit and hedge funds that engage in more strategies than ever, including commodities, trade finance, film funding, SME credit, or aircraft financing. Local managers and service providers notice a marked increase in appetite from foreign investors to invest in funds that are managed by regional managers who invest in the region. Gulf economies seen as favourable environment for public equities and infrastructure The markets of the Gulf stand to do well with a strong dollar peg and ongoing significant government spending and investment domestically. There has been legitimate concern recently about the rapid drop in oil prices. However, given a decade of accumulated reserves from twin surpluses, the governments can afford to run at a slight deficit, if that becomes necessary, for a few more years. This maintains a favourable environment for both public equities and infrastructure investments. However, after the recent rerating (UAE and Qatar joining the MSCI Emerging Market Index), being highly selective within that opportunity set will be critical. The multiples that are being offered in the IPO space have become very attractive to local businesses and local families now to go public. This, together with a more friendly regulatory framework that further encourages IPOs, will also pave the way to more IPOs. Vehicles like a GCC Pre-IPO fund are set up to capitalise on private to public transactions by investing in pre-IPO founder shares. The Growth Story of Islamic Finance In the past years, a number of developments took place within Islamic Finance, particularly in the sukuk space. This is an asset class with a very large supply and demand imbalance. Sukuk went from being a type of an ABS security that was rarely found outside of Malaysia or Indonesia to a major asset class that an increasing number of financial institutions are looking to get exposure to. A big development over the last two quarters was the issuance of sukuks from Non-Islamic countries. We have seen a U.K. Government issue, a South African Government issue, a Hong Kong Government issue and a forthcoming Luxembourg Government issue. These are all major steps to giving the asset class as a whole increasing credibility. Islamic Finance has evolved from an industry which in the past has predominantly serviced a retail type of client base to now also servicing institutional clients and conventional investors. The important thing to remember is that a well-managed Shariah fund can perform just as well and if not, actually better than a conventional peer. First open architecture Islamic managed account platform launched QInvest, Qatar’s leading investment bank, has created QMAP as the world’s first open architecture Islamic managed account platform. It brings best practice from the conventional fund industry to Shariah investors through a range of global partnerships with managers around the world. QMAP provides the structures and support to help asset managers launch Sharia compliant products, and ease the compliance burden. The platform has met with strong demand from both investors and product providers.
The Opalesque 2014 Gulf Roundtable was sponsored by Eurex and Maples Funds Services and took place October 20th in Dubai with:
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